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A bullish stock market story is quietly unfolding


Since the beginning of the year, business news has been riddled with stories about , , and an .

Meanwhile, it’s earnings season. And corporate America has been announcing a mix of and with its quarterly financial results.

Amid this backdrop, a bullish story has been emerging: Expectations for are being revised up.

“Since the beginning of the earnings season, 4Q21 EPS has been revised up 4.3% to $53.48 (+26% y/y) and 2022 EPS has been revised up 0.6% at $224.90 (+8% y/y),” JPMorgan’s Dubravko Lakos-Bujas wrote on Thursday. “Looking to the following year, 2023 EPS has been revised up 0.7% since the beginning of the earnings season to $247.54 (+10% y/y).”

Source: JPMorgan

Source: JPMorgan

This may be a surprising development considering , , and other pandemic-related disruptions have led to higher costs, which have been on display in the eye-popping producer and reports.

However, corporations have been able to offset these rising costs through operating efficiencies, operating leverage, and price hikes. It’s why , and it’s why analysts expect profit margins to .

It’s definitely the case that consumers and businesses to be having to pay up for their goods and services. But for now, they have the .

Just this week, (), (), and () were among companies that said consumers were paying for recently implemented price increases.

The good news is all of this inflation may soon cool off with the Federal Reserve signaling its willingness to take aggressive action to contain inflation. Indeed, BofA strategist Savita Subramanian wrote on Monday that the Fed’s efforts to fight inflation represented a for corporate earnings.

There’s no question that the economy is confronting a lot of crosscurrents. But even amid the uncertainty, there is a lot of evidence that shows prospects are more bullish than bearish.

Sam Ro is the author of TKer.co. Follow him on Twitter at @SamRo.

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